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New Custom, Top-Level Domains Coming; From ‘Widget.com’ to ‘.Widget’

The range of possible domain names is about to greatly increase. That’s because ICANN, the authoritative body over Internet domain names, is about to add new custom top-level domains — the portion to the right of the period — that could include brand names and other customized names.

Come January 2012, companies, organizations, or anyone can apply for a custom top-level domain. The process is expensive — the application fee alone is $185,000 — but the ramifications to the Internet infrastructure and URL configurations are extensive. Companies that have announced their intentions to apply for a custom, top-level domain include Hitachi (.hitachi), Canon (.canon), and Deloitte (.deloitte).

To explain the new top-level domains to us, we recently spoke with Gretchen Olive. She’s director of policy and industry affairs for Corporation Service Company, which consults with companies on domain name and trademark matters.

Practical eCommerce: ICANN, the authoritative body over Internet domain names, is about to add new top-level domains, which are the portion of a domain name after the period. Why is ICANN doing this?

Gretchen Olive

Gretchen Olive: “When ICANN was formed back in the late 1990s, one of their primary missions was to expand the domain namespace. There’s this perception that there’s no more good .com names, so ICANN has been focused on adding namespace to allow more people to participate fully on the Internet.”

PEC: ICANN will allow companies and organizations to apply for customized top-level domains. So, if Practical eCommerce wanted to, we could apply for, say, .practicalecommerce. Is that correct?

Olive: “That’s absolutely correct. They’ve had some smaller rounds where we’ve seen things like .movie and .asia, but this is the first time where companies can come forward and apply for their own .com thing. This is a very unique and historic opportunity.”

PEC: Could you walk us through that process? Say a company wants to reserve .widget. How does that work? Who does the company deal with, what’s it going to cost, what’s the registration fee?

Olive: “It is a very complex process. In fact, if you’re looking for some leisure reading, go to ICANN.org and download the 350-plus-page applicant guidebook, which spells this all out.

“Basically, there’s going to be an application window that will last 90 days, it’s currently scheduled to begin on January 12, 2012, and run through April 12, 2012. There’s a 50-question application. Even though it doesn’t sound that long, it will likely require several hundred pages of response to those 50 questions. With that application will also need to include a $185,000 (U.S.) application fee.

“When you submit an application, you’re actually submitting to become a domain name registry. That application will go through a really involved and robust evaluation process where ICANN will evaluate not only the applicants, who they are, making sure that they’re not people who’ve been engaged in fraud in the past, they’re not people who have a history of cyber squatting, but they’re going to be evaluating based on the application, that applicant’s ability to financially, operationally and technically operate a domain name registry.

“It’s not only something that requires kind of expertise and know how, it requires a lot of technical infrastructure to do that. So, the application fee of $185,000 — while expensive — it’s really just the tip of the iceberg because there’s a lot that has to be done to set up the technical infrastructure to do this. First of all, this is not something an individual can do. Entities can apply, not individuals, but to do this you’re really looking at probably in the first year, somewhere between a $700,000 and $1 million initial investment to go through this entire process, meet all ICANN’s requirements and get the technical infrastructure set up.

“It’s not for the faint of heart certainly, but it is something that many companies are considering as part of their strategies. While the application itself is submitted directly to ICANN, most entities are working through a third party to accomplish this and typically for companies, they’re going to their existing corporate domain name registrar to assist them.”

PEC: So, it’s $185,000 to apply. What if the application is turned down?

Olive: “That’s a risk. There are a lot of twists and turns to this process. If the application is turned down, if it’s found to be either deficient or third parties come forward and object to applications — there are different specified grounds for objections — if people come forward and object to the application and the objection is sustained basically, then you lose that $185,000. It is a high stakes game here for people who are applying. That’s why those who are applying are working with people who are very knowledgeable in this area, because there’s a big risk.”

PEC: So, the application fee is $185,000, but the total cost in your estimation is closer to $750,000 to $1 million. What’s involved in that total cost?

Olive: “When I gave you that number, that’s a total first year investment. It includes the application fee. It includes, if you are awarded the TLD, you will need either escrow or provide a credit instrument guaranteeing three years of operation expenses. It includes what it would cost to get the technical infrastructure set up, tested and compliant with all of ICANN’s requirements. It also includes some fees related to data escrow as well as kind of expert support or third party support to put together your application and support you through the setup and launch of your TLD. There’s a lot involved, some of it technical nature and some of it more soft cost around expert support.”

PEC: For a business or an organization, what’s the thought process that they use to decide whether it’s worth that investment, the initial fee of $185,000 plus the other ancillary cost that you referred to?

Olive: “I’ve been talking to many large organizations over the last six months and actually following the new gTLD initiative for over three years now, and the last five months have had a lot of conversations with companies, and it is a little different for each company. Some look at the new gTLD initiative as a truly historic opportunity to own their brand name on the web, especially for these companies who might have competing trademark issues where there’s another company out there by the same name and they both share the same trademark. There seems to be a kind of a land grab impetus behind their plans so they kind of see that as justification alone for participating in this process and getting this space.

“For others who don’t have those concerns, and are looking at it more from a business opportunity, they’re really looking at, maybe they have some kind of problem online, maybe they’re dealing with [fraud] issues like phishing and pharming — or they’re dealing with issues around counterfeiting or gray market distributions, things like that — for companies who have those issues, they look at what the investment would have to be here and they say, ‘Those other problems are causing us a lot of financial loss as well.’ They’re trying to see if there’s some kind of strategy they could use behind their new gTLD to see if they could mitigate those problems online and if they’re able to find that strategy. It does vary by company, but really it comes down to a desire to have that real estate online.

“The other thing people are looking at is it’s just an incredible branding opportunity, and potentially a new way to interact with customers. Think of a situation where a company could provide a client or a member a personalized brand [a domain name] like ‘theirclientsname.theirbrand’ and maybe they can provide some specialized page where they could interact with the company in that personalized space where all their particulars are right there. There are some interesting ideas around that. This really could be in some ways beyond being historic, being able to allow brands to have their own faces. It might even further some of the social media things that are going on in the way companies are interacting with customers. I think our imaginations are our only limitation here, but there certainly is a high cost to doing this, so it’s not for every company.”

Listen

Listen to the complete audio interview with Gretchen Olive.

PEC: Have any businesses, corporations, or organizations announced publicly that they will be doing this?

Olive: “There are a few, and I will highlight the fact that it is just a handful. Companies like Canon, Hitachi, Deloitte, Unicef, they’ve all announced that they are going to go forward with application. But by and large, most corporations are keeping their intentions private. I have seen some recent articles in the press where there are some companies coming out saying they’re not going to do it, companies like Procter & Gamble and Hewlett-Packard. But there are many companies still deciding what to do and many that we’re working with who don’t want to announce in advance that they’re applying. Actually, during that application window that we talked about earlier, from January 12 through April 12, while people will be submitting their applications, no one will see that. No one will see who’s submitting and what they’re submitting for. It won’t be until sometime around the last week of April 2012 or the 1st of May 2012 that ICANN will publish the list of people who applied, and by that time the application window will be closed. So, some people don’t want to announced because they want that first mover advantage.”

PEC: Any special thoughts on how this could affect ecommerce? If a company’s name presently is “widget.com” and it changes it to “.widget,” what part of the name would be in front of the .widget?

Olive: “I think that there are many companies that have very complex URL strategies. A lot of times they’ll have a domain name like ‘bigcompany.com/us/productname/’ for a particular marketing campaign. So, these customized domains can provide a way for ecommerce businesses or online retailers to simplify some of the URL strategies and get consumers right where they want to get them with a very short, snappy URL. You could have something like ‘productname.company’ and get them right to that product page, without having to get them to the main page and have them navigate, or giving them these long URLs. You could also have things like ‘go.brand’. Maybe that will get you to their mobile site or something like that. I think there’s lots of kind of creative ideas here on what people can do and how they can make navigating and remembering the URLs that they’re trying to push out there to consumers a little better.”

PEC: Tell us about the company that you’re with, Corporation Service Company. What does Corporation Service Company do and why is it interested in this new top-level domain name?

Olive: “Corporation Service Company, or CSC, is a company that’s been around since 1899. We’re headquartered in Wilmington, Delaware, but have offices around the world. Our legacy business is managing corporate entities and corporate names for large organizations around the world. In the late 1990s when ICANN was formed and business was going to the web in droves, we saw this need to help companies manage this namespace, to manage their corporate identity online. So, we moved to that space in the late 1990s and over the last 10 to 12 years have worked very closely with large companies to manage their identity online, of which a domain name is a very big part. We’ve really been following this new gTLD initiative for our clients because this is a historic change. So we’ve really worked with our clients to make sure that they understand that this change is coming, what it may mean to their business and try to help guide them towards developing a strategy whether it be apply for a new gTLD or simply watch to make sure that people are not infringing on their brand or on their legal right to their names online. We’ve been pretty involved in this space and we’ll continue to be so to protect our clients’ interest.”

PEC: Anything else on your mind for our readers?

Olive: “Get up to speed on the new gTLD initiative. We certainly can provide some whitepapers and other information in that regard on our website, but I think it’s important that they are aware of the new gTLD initiative even if it’s not something that they’re going to go and apply for. This will affect the Internet, in essence a re-indexing. We’re going to go from 22 active gTLDs like .com, .net and now we’re suddenly going to have hundreds more, so kind of going from a very brief directory to a big phonebook. I think it’s going to be important for online retailers to be aware of this, to monitor this development and constantly be assessing how this might impact their business.”

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My company, Afilias, recently sponsored a webinar by the Columbia Business School’s Center on Global Brand Leadership, “Who Should Invest in a dot Brand? Evaluating the Business Case for a Top-Level Domain Name.” It was designed to help businesses of all types better understand the pros and cons of ICANN new gTLD program. Brands can watch a replay of it, or just selected highlights, at http://afilias.info/gtld-webinar.